Calendar

LNG Natural Gas Market Update – 8th – 12th May 2017

Market Analysis

Crude Oil

Brent started recovering from mid-week & recovered 4.43% from Tuesday price of $48.73/bbl.

Brent uptick is primarily due EIA inventory numbers which depicted 5.2 million barrel of commercial inventory decrease and 0.2 million barrels of gasoline.

The US inventory draw dawn needs to be monitored closely as last week crude prices were down primarily on technical.

AS per BHI, US rig count increase by 8 and now stand at 885.

Market expecting OPEC to maintain the oil cut for next six months as this perhaps is the only news, which can sustain oil prices.

Natural Gas

Natural gas prices surge by 8.01% this week primarily lower than expected built up of inventories. AS per EIA, working gas inventories is 2,301 BCF on May 5, lower increase than expected increase of 53 BCF.

Recent uptick is primarily due to positive sentiments in the market as US and China agreed to bolster trade.

Mild weather has been a major reason for downward price movement in Europe.

According to experts, TTF is transforming into more acceptable marker in Europe.

Currency

US dollar face pressure on disappointing news on American inflation and retail sales. Right now trading at 1.0909 against Euro, down by 0.44%.

Euro depicted strength due to stronger German growth news from 0.4% to 0.6% expansion.

GBP took a hit on Thursday due to BOE decision of keeping Interest rate unchanged and downward revision of estimated growth from 2.0% to 1.9%. Trading currently at 1.2882 from 1.2939 at the start of the week.

Weather

Spring season in full swing in Europe, North & South America.

Middle East and Asia is facing hot temperature.

Europe temperature remained mild from 15o-20o

Middle East in low 30o C, whereas Indian Subcontinent is facing hot temperature of around 35o

North East and South East Asia regions are also entering into summer with mercury ranging between 25o – 30o

South America is also witnessing moderate temperature.

Weather outlook is same for coming week, which means additional requirement from Asian markets and subdued interest from Europe.

LNG

LNG prices moved south in the markets of Japan, Korea and Taiwan, primarily due to lower demand from Europe and supply abundance. Friday LNG prices were heard at mid $5/MMBTU level.

Prices in India also down throughout the week as India is taking advantage of supply glut.

Storage tanks are full in India and with monsoon approaching, Dabhol terminal will not be accessible for vessels.

Prices in Europe witnessed decrease by 1%, primarily due to mild weather and lower wholesale prices.

On the supply side Angola has put one cargo on tender for Mid-May loading, while Nigeria has supply available and closed a tender for May delivery.

Indonesia Bontang plant also issued a tender for June and July loading.

US and China agreement on trade created excitement in the LNG sector, however US Henry Hub prices are still not workable for Chinese markets.

Cheniere Energy already in discussion with Chinese State owned companies for supply of LNG in long term basis. So far Cheniere has sold nine cargoes on spot basis to China.

Number of gas discoveries has compelled Egypt to reduce it dependence on imported LNG, with deferring cargoes in 2017 and aim to cut it further to 30 cargoes in 2018.

Sinopec has finished building its third LNG terminal, located in the northern Chinese port city of Tianjin. The terminal has the capacity to manage 3 MTPA (400 MMSCFD).

Lebanon plans to moor three FSRUs along its coastline.

Petronas is focusing on South East region of Pakistan, India and Bangladesh for supply of LNG.

Thailand’s PTT plans to expand its LNG import facility by setting up another LNG import terminal with 7.5 MTPA capacity.

Overall demand in Asia expect to pickup in coming weeks due to summer demand.

LNG Merchant Activity

This week 52 vessels carrying 3.5 million tons (178.40 BCF) loaded from various ports across the globe.

Six vessels carrying 20.74 BCF departed from Nigerian port for European and Asian destinations.

One vessel left from Equatorial Guinea carrying 2.99 BCF.

Pont Fortin, Trinidad & Tobago loaded two vessels with 5.65 BCF.

3 vessels loaded this week from Sabine Pass, USA.

Two vessels departed from Russia carrying 6.07 BCF.

12 vessels left from Australian export terminals at Darwin, Dampier and Gladstone ports for Japan, China and Singapore carrying 39.14 BCF.